Ares Commercial Real Estate (ACRE) Q1 2025 earnings summary

Executive summary

• Achieved GAAP net income of $9.3 million ($0.17 per share) for Q1 2025, reversing a prior year loss, and distributable earnings of $7.2 million ($0.13 per share).

• Increased liquidity and reduced leverage, collecting $307 million in loan repayments, the highest as a percentage of principal in company history.

• Declared a $0.15 per share dividend for Q2 2025, yielding over 14% annualized at current stock price.

• Book value per share remained stable at $9.88.

• No new migrations to risk-rated four or five loans; portfolio fundamentals improved.

Financial highlights

• Total revenue for Q1 2025 was $14.9 million, with net interest margin of $9.3 million and interest income of $27.5 million.

• Distributable earnings were $7.2 million ($0.13 per share); no realized losses in the quarter.

• $307 million in repayments, more than double the prior quarter, reduced borrowings and increased liquidity.

• Net debt-to-equity ratio (excluding CECL/CSOL) declined to 1.2x from 1.9x year-over-year.

• As of May 2, 2025, available capital was $147 million, including $113 million in cash.

Outlook and guidance

• Positioned to accelerate resolution of underperforming assets and selectively originate new loans.

• Near-term earnings may vary due to ongoing portfolio repositioning and market volatility.

• Expect to begin sales of Brooklyn condo development by year-end 2025 and into 2026.

• Management expects primary sources of cash to be sufficient for operating and investing activities for at least the next 12 months.

• Will continue to evaluate share buybacks, new investments, and other capital uses.